Waiting for Lebanon’s Internet Godot

Is Lebanon’s Internet Godot on the way? Are the “important developments” Telecom Minister Nicolas Sehnaoui announced on July 5 the ring tone the telecom sector and the public have been waiting for?

All fingers are crossed and waiting for the draft bill Minister Sehnaoui said he was presenting to the Cabinet in the coming weeks to reduce the price of Internet services.

Can anyone remember the world before the network of networks? And how is it that a “cloud” has come to dominate our lives on a personal level and economic growth on a national one?

The attraction is still there after more than 25 years. It continues to grow thanks to the speed of innovations, the evolving uses of the Internet, and the creation of Smartphones and mobile devices.

Sadly, Lebanon’s low speed Broadband connectivity woes have been negatively affecting the flow of investments to the country. Moreover, lack of adequate Internet connectivity and the high cost of Internet services are also hampering individual and corporate production capacity.

Since 2009, the cure to the ailing Internet has been a Telecom policy authored by then Telecom Minister Gebran Bassil. It called for the creation in Lebanon of a “people-centered information society” based on a “vision of growth, investor confidence, public-private partnership, fair competition and transparent regulations.” [See “Telecom road sign points to Bassil‘s general rules,” 10 Jun 2011]

For companies and individuals to make use of the enormous wealth of facilities the Internet offers, Internet Service Providers (ISPs) need to easily buy international bandwidth to pass on fast, affordable, connections to the consumer.

How does this work in Lebanon? Where does the country get its Internet bandwidth and how is it passed on to the consumer?

These questions were addressed in an in-depth look at the Telecom sector in Lebanon and the problems it is facing on Sabine Oueiss’ TV program “Kalam bel Arkam” on June 12. The show’s host was joined by Cedarcom-Mobi Group CEO Imad Tarabay and Dr. Riad Bahsoun, an international telecoms expert. [See Cedarcom’s YouTube channel]

In his opening comments, Tarabay presents two options, illustrated with graphs – the “Internet in Lebanon Today” and the “Competitive Internet Tomorrow.” He explains how he sees the future of the industry and the Internet, how Lebanon gets its international bandwidth, and how the Internet is priced.

International bandwidth is the connection that links Lebanon’s ISPs to the cloud. The ISPs, through Data Operators’ wire-line (like DSL) or wireless (like Mobi) service, connect the end user to the cloud.

The best and cheapest way to connect a country to the cloud is via submarine fiber-optic cables. There are satellite connections, but these are still very expensive and not of the best quality.

Internet sources

Submarine international cables connect Lebanon directly to Cyprus, Egypt, and Syria. Official figures on their exact capacity are not available. The figures stated are as close a range as possible from various telecom sources, including the Telecom Ministry website.

Cadmos, a 230-km fiber-optic submarine telecom cable system in the Mediterranean, links Beirut to Cyprus. It started in 1995 with a design transmission capacity of 622 Mbps. In September 2010, the Telecom Ministry signed an agreement with Cyprus to increase Lebanon’s share. According to some sources, after its recent upgrade Cadmos now has 40 Gbps. Lebanon gets 38% of the bandwidth; Cyprus, Syria and other countries 62%.

Figure 1 – Submarine cables connect Lebanon directly to Cyprus, Egypt, and Syria, but official figures on their exact capacity are not available.

Berytar is co-owned by Lebanon’s Telecom Ministry and Syrian Telecom Est., with 6.25 percent for ARENTO, the Arab Republic of Egypt National Telecommunications Organization.

According to informed Telecom sources, by way of international fiber-optic cables, Lebanon receives the E1 (2 Mbps) that goes to the Telecom Ministry which in turn distributes it through local fiber-optic cables to ISPs at 100 times more than its original price. For example, they say, an E1 costs the Ministry $30; it sells it to ISPs at $3,000. The ISP then distributes the bandwidth to the consumer.

How do ISPs get the E1s in Lebanon? They go through a very tedious process. An application is submitted to the Telecom Ministry that goes through the lengthy process of paperwork and studies before a written decision is issued and a copy delivered to the ISP. ISPs then have to submit a bank guarantee and make a one-month upfront payment. Sometimes, after making this payment, the E1 lines take up to 12 months or more to be activated!

The supply of bandwidth — and therefore Internet connection, speed and price — is channeled and controlled by the Telecom Ministry.

How do ISPs get the E1s in Saudi Arabia, for example? It’s simple. ISPs contact their account manager at STC, request capacity and it is activated. It is called “Bandwidth on Demand.”

We are hoping that with the IMEWE cable now operational and the upgrade of Cadmos, the Telecom Ministry will enforce a mechanism that simplifies and quickens the process — Bandwidth on Demand!

Today and tomorrow

On “Kalam bel Arkam” Cedarcom’s Tarabay explained how Lebanon’s international bandwidth is received and distributed in Lebanon and how it could be in a competitive market via two charts.

The “Internet in Lebanon Today” shows the current status for an ISP. “Competitive Internet Tomorrow,” illustrates how it could be, if there were competition on international fiber-optic submarine cables, and the benefits that could be passed on to end users.

Graph one, above, takes the example of an ISP. In this case LYNX is connected to Cedarcom’s wireless network and sells the MOBI service.

The Telecom Ministry is the only operator with submarine cables connecting to the cloud. LYNX gets 2 Mbps at $3,000 a month from the Telecom Ministry which it passes to the user. Dividing that cost on a scale of 30 users, the cost of bandwidth will be $3,000/30, or $100 per month.

The cost is high because there is only one source of Internet bandwidth. In the case of such a monopoly, prices are fixed and may change – or not. In Lebanon, the last time the E1 prices were dropped was in 2006!

In a competitive Internet scenario (graph below), the Telecom Ministry would have competition and various carriers would bring in submarine cables landing in Lebanon. Each sets its wholesale price to ISPs. This creates competition on international connectivity and ISPs can select their carrier of choice.

So, in essence, two carriers invest tens of millions of dollars and build submarine cables connecting Lebanon to the cloud, giving the country the redundancy needed in severe cases. Depending on the cable’s capacity, length, landing points, etc., each carrier has its respective cost per E1.

In this scenario, Carrier One passes on the 2 Mbps to ISPs for $120; the Telecom Ministry passes on the 2 Mbps to ISPs for $100; and Carrier Three passes on at $70. This gives LYNX and all other ISPs in Lebanon three choices.

From a cost perspective, the ISP can choose to buy all the capacity from Carrier Three, but it risks interruption in case this cable is disrupted for any reason. A smarter choice would be to combine capacity from two sources and have redundancy – half the capacity from Carrier Three and half from the Telecom Ministry.

Comparing the “competitive landscape” to the current situation, the consumer could save up to $97 thanks to lower international E1 prices.

Waiting for the IMEWE Godot

Lebanon has an additional option: The IMEWE cable.

The IMEWE (India-Middle East-Western Europe) cable project — for India, Pakistan, UAE, Saudi Arabia, Egypt, Lebanon, Italy and France – was signed by Lebanon in 2006. The cable was completed and switched on in December 2010 – but not in Lebanon! That is until July 4, 2011 when the Telecom Ministry allocated a small quantity of E1s to local ISPs.

IMEWE is a 13,000-kilometer submarine communications cable system between India and France. With a 3.84 Terabits per second capacity, ISPs and network operators hope to utilize the additional bandwidth to support high-bandwidth peer-to-peer IP-based broadband services such as multimedia streaming, broadband Internet, and voice/video telephony.

All Internet hopes in Lebanon are pinned on IMEWE. Said to have cost the Lebanese government $45 million, with 30 Gbps broadband capacity, it will greatly improve the speed and quality of Internet services in Lebanon. Again, there is no official confirmation of IMEWE’s capacity. Official sources have said in the press it could be updated to 1.4 Terabits.

The excellent news is that Minister Sehnaoui recently stated plans to slash the E1 prices and everyone is now waiting for the draft bill he is due to present to the Cabinet to reduce the price of Internet services.

However, Lebanon needs competition at the international fiber-optic level. Competition brings redundancy and reduces prices (or stops price-fixing). Redundancy is very important to keep Lebanon’s Internet connections “ON” in case IMEWE or any other cable is interrupted. Prices would go down like in any competitive market, especially in Lebanon where prices are fixed by the Cabinet. In Europe, the wholesale price of E1 is… 2 Euros per month!

Activating the IMEWE cable is a step in the right direction. We also hope the “important developments” promised by Minister Sehnaoui will translate into lower prices to pass on to the Lebanese consumers.